Many of the highest performing stocks are in technology companies. These companies' innovations create services and products integral to daily life and are upending traditional industries and business models. Investors craving the explosive growth potential of these innovations can look no further than the best stocks to buy now.

Technology stocks come in all shapes and sizes, from well-known global enterprises such as Amazon (NASDAQ: AMZN), Facebook (NASDAQ: FB), and Alibaba (NYSE: BABA) to smaller startups just making their IPOs that could potentially offer massive returns to early investors. The key to seeing a big return on investment (ROI) is picking the right stocks at the right time.

How to Find the Best Tech Stocks to Buy Now

To help you find the best stocks to buy, Money Morning gives you insight into which stocks we see as good buys, which stocks should be avoided, and what news matters in the Dow Jones everyday.

Growth and Momentum

The best tech stocks to buy now are often stocks with strong upward momentum. One big benefit of buying tech stocks is how much growth potential the sector offers. Some high growth stocks may not be profitable yet are difficult to evaluate using traditional metrics. That is why looking for tech stocks that have been moving higher can be a good indicator that more people want to buy them and that they're riding a trend. A good way to examine growth and momentum is by evaluating a key piece of technical analysis called the moving average.

• Moving Average – A stock's moving average (MA) is the average closing price over a certain time period, like 20 days, 50 days, or 200 days. It's used to get a baseline for where the stock is trading that removes any short-term fluctuations. When a stock is trading above its 20- or 50-day MA, it shows good upward momentum.

Fundamentals

Fundamentals are, simply put, data that can potentially impact the price of a company’s stock. Factors included in a fundamental analysis of a company can include its management of capital, its cash flow, profit retention, funding for growth and research and development, and more.

The fundamentals of technology stocks are an important part of evaluating their potential. This is because well-established tech companies such as Google and Microsoft that boast solid fundamentals have also proven their ability to maintain leadership in their markets.

A valuable fundamental to consider is earnings per share:

• Earnings Per Share (EPS) Growth – Earnings per share refer to the company's profit divided by its outstanding shares. Strong growth in EPS means a bigger ROI. EPS growth of 25% or more over a 12-month period is a good sign.

Value

A successful track record isn’t always an indicator that a company is offering one of the best tech stocks to buy now. In addition to looking at recent earnings, it’s important to consider the stock’s price-to-earnings ratio (P/E).

P/E compares the price of a share in a company to its earnings per share. A high P/E means that a stock’s price is expensive compared to its earnings and is potentially overvalued.

A low P/E means that a stock is cheap compared to its earnings and could be undervalued. Buying undervalued stocks is an important part of value investing. Each sector has its own "normal" P/E ratio. Tech stocks typically have high P/Es because there's high future growth anticipated.

How Do I Buy Technology Stocks?

Tech stocks can be purchased just like any other stocks. You can buy stocks in individual companies which you have studied and believe will give you a solid ROI.

Having a hard time dividing which stock is right for you? Maybe you can choose to invest in an ETF or mutual fund. By doing so, you get exposure to multiple stocks that are picked by the fund manager. Funds can be focused on IPOs, companies that give dividends, high-growth companies, specific sectors in the tech sphere, and more.

Although ETFs give you broader exposure to the tech market as a whole, owning the best technology stocks individually offers savvy investors a better chance at making more money than by simply looking into ETFs.

Why Should I Invest in Tech Stocks?

Investing in tech companies is popular because it is an exciting way to profit on some of the fastest growing businesses in the world. Early investors in some of the biggest tech companies have seen massive returns. For example, Amazon stock, which is now worth thousands of dollars, had an IPO of $18.

While not every stock is going to skyrocket the way Amazon has, there is still plenty of room for growth in the tech world and the opportunity for smart investors to pick stocks with a bright future.